Medicaid & CHIP in 2014:
A Simple Seamless Path to Affordable Coverage
The New World of MAGI
1
This presentation is intended as a general summary of the content of proposed
regulations. For the official proposals, see the Notices of Proposed Rulemaking
published in the Federal Register.
MAGI-Based Methodologies
Overarching Goals
Alignment of financial eligibility rules across all insurance affordability programs
Ensure seamless and coordinated system of eligibility and enrollment
Protect eligibility of low-income populations
MAGI-Based Methodologies
Key Statutory Provisions
Alignment
“Henceforth, thou shalt use MAGI as defined in section 36B of the Internal Revenue Code of 1986…”
(§1902(e)(14)(A) of the Act, as added by ACA §2002, and §2107(e)(1)(E) of the Act, as added by ACA §2101(d)(2))
MAGI-Based Methodologies
Key Statutory Provisions
To create a seamless, coordinated system which –
Uses a single streamlined application for all insurance affordability programs.
Ensures enrollment in Medicaid/CHIP without further determination by State Medicaid/CHIP agency of individuals determined eligible based on MAGI.
Provides for no wrong doors. ACA §§1413, 2201 (creating §1943(b)(3) of the Act) and 2101(e) (creating §2107(e)(1)(N))
MAGI-Based Methodologies
Key Statutory Provisions
Protect Medicaid populations
“Make sure individuals eligible prior to ACA don’t lose coverage, especially kids” (§1902(e)(14)(A) and (E))
“Continue to follow Medicaid rules regarding ‘point in time income ’ and ‘sources of countable income’” (§1902(e)(14)(H))
Four Continents in the World of MAGI
MAGI-based methodologies
Treatment of types of income
Household composition and size
Budget period
Income standard conversion
MAGI Screen
MAGI-Based Methodologies
The Aerial View
Types of Income
Rule today – All income/money received from whatever source, less mandatory and optional disregards and exclusions
MAGI-based income
Tax rules apply with exceptions (435.603(e))
No asset test or income disregards, except 5% FPL for all (435.603(g))
MAGI-Based Methodologies
The Aerial View
Household Composition and Size
Rule today – Based on legal responsibility; parents and children living together, but prohibited deeming rules apply.
MAGI-based households (435.603(f))
Medicaid and tax households the same for most families
Certain exceptions apply
Rules for non-filers mirror rules for filers
Budget Periods
(a.k.a “point-in-time”)
Rule today – Current monthly income
Budget period under MAGI (435.603(h))
New applicants/enrollees – current monthly income
State flexibility to account for predictable fluctuations in income
Beneficiaries after initial enrollment – current monthly or projected annual income (State option)
Income Standard Conversion
Rule today – Net income standard after disregards
Under MAGI
States to convert current net income standards to new equivalent “gross income” standards such that individuals do not lose coverage
Equivalence in the aggregate versus at individual level
Guidance forthcoming
MAGI Screen
Same process regardless of application door
First step: Eligibility based on MAGI
Everyone evaluated for eligibility based on MAGI-based income first.
Determination based on other factors for those not eligible based on MAGI.
Additional steps “behind the scenes” may be required.
Into the Weeds We Go
Income Methodologies under MAGI
Our process: Detailed analysis of tax treatment and current Medicaid treatment of income
NPRM: Treatment of income under the tax code adopted with limited exceptions.
Taxable income received as a lump sum
Educational scholarships and fellowship grants
American Indian/Alaska Native income
Income Methodologies under MAGI
(The Weeds, Con’t)
Biggest change for Medicaid
Social Security (Title II) Income
Depreciation of business expenses
Child support
The Forest and the Trees
Household Composition Under MAGI
Our process: Analyzed multiple household scenarios under tax code and current Medicaid rules
The Forest: Medicaid household = tax household in most cases Parents and children – biological, adopted and step –
living together
The Trees Filing households (435.603(f)(1) and (2)) Non-filers (435.603(f)(3))
Household Composition for Exchanges
Under Section 36B of the IRC
Primary tax payer and all tax dependents
Tax dependents
Qualifying children (under 19 or under 23 and full-time student)
Qualifying relatives
Household Composition Under MAGI
Tax Filing Households
NPRM mimics tax household
Major Change for Medicaid
Stepparents and stepchildren
Children/siblings with income
Children ages 21+ claimed as tax dependents
Household Composition Under MAGI
Tax Filing Households
Exceptions to adoption of tax household
Individuals other than biological, adopted or step children claimed as tax dependent
Children claimed by non-custodial parent
Married couples and children of parents not filing jointly
Pregnant women
Household Composition Under MAGI
Non-Filing Households
Rules for non-filers parallel those for filers
Spouses/parents and children living together in the same household
No distinction between biological, adopted and stepparents/children
“Children” include individuals under 19 or under 21 if a full-time student
Household Composition Under MAGI
Whose Income Is Counted?
Rule same for filers and non-filers (435.603(d))
Mimics tax code rule
Income of adults, parents and spouses always counted
Income of children in parents’ household counted if required to file a tax return
Individuals and Groups Excepted from
Application of MAGI-Based Methodologies
No income determination made by Medicaid agency
SSI, Title IV-E recipients
Individuals deemed to be receiving SSI
Express Lane Agency income finding
Eligibility on the basis of being blind or disabled or need for long-term care services
Individuals and Groups Excepted from
Application of MAGI-Based Methodologies
Eligibility for Medicare cost sharing assistance
Medically needy
Individuals aged 65 +
Financial Methodologies for MAGI-Exempt
No change
Use of asset tests and disregards unaffected
Income standard conversion not needed for eligibility determination
Option to base ongoing eligibility for beneficiaries on projected annual income not available
Questions and Comments
Sarah deLone
410-786-0615
Stephanie Kaminsky
410-786-4653
